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Tally ERP 9 - Tutorial

Tally ERP 9 - Tutorial

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Published by Chandan Mundhra
Tally ERP 9 - Tutorial
Tally ERP 9 - Tutorial

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Published by: Chandan Mundhra on Jul 15, 2011
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08/06/2014

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1
Lesson 1: Basics of Accounting
1.1 Introduction
Accounting is a process of identifying, recording, summarising and reporting economic informa-tion to decision makers in the form of financial statements. Financial statements will be useful tothe following parties:
Suppliers
Customers
Employees
Banks
Suppliers of equipments, buildings and other assets
Lenders
Owners
1.1.1 Types of Accounts
There are basically three types of Accounts maintained for transactions :
Real Accounts
Personal Accounts
Nominal Accounts
Lesson Objectives
On completion of this lesson, you will be able to understand
Principles and concepts of Accounting
Double Entry System of Accounting
Financial Statements
 
Basics of Accounting
2
Real Accounts
Real Accounts are Accounts relating to properties and assets, which are owned by the businessconcern. Real accounts include tangible and intangible accounts. For example,
Land
Building
Goodwill
Purchases
Cash
Personal Accounts
Personal Accounts are Accounts which relate to persons. Personal Accounts include the follow-ing.
Suppliers
Customers
Lenders
Nominal accounts
Nominal Accounts are Accounts which relate to incomes and expenses and gains and losses of abusiness concern. For example,
Salary Account
Dividend Account
SalesAccounts can be broadly classified under the following four groups.
Assets
Liabilities
Income
ExpensesThe above classification is the basis for generating various financial statements viz., BalanceSheet, Profit & Loss A/c and other MIS reports. The Assets and liabilities are taken to Balancesheet and the Income and Expenses accounts are posted to Profit and Loss Account.
1.1.2 Golden Rules of Accounting
Real AccountsPersonal AccountsNominal AccountsDebitWhat Comes inThe ReceiverExpenses and LossesCreditWhat Goes outThe GiverIncomes and Gains
 
Basics of Accounting
3
 
1.1.3 Accounting Principles, Concepts and Conventions
The Accounting Principles, concepts and conventions form the basis for how business transac-tions are recorded. A number of principles, concepts and conventions are developed to ensurethat accounting information is presented accurately and consistently. Some of these concepts arebriefly described in the following sections.
Revenue Realisation
According to Revenue Realisation concept, revenue is considered as the income earned on thedate, when it is realised. As per this concept, unearned or unrealised revenue is not taken intoaccount. This concept is vital for determining income pertaining to an accounting period. Itreduces the possibilities of inflating incomes and profits.
Matching Concept
As per this concept, Matching of the revenues earned during an accounting period with the costassociated with the respective period to ascertain the result of the business concern is carried out.This concept serves as the basis for finding accurate profit for a period which can be distributed tothe owners.
Accrual
Under Accrual method of accounting, the transactions are recorded when earned or incurredrather when collected or paid i.e., transactions are recorded on the basis of income earned or expense incurred irrespective of actual receipt or payment. For example, a seller bills the buyer atthe time of sale and treats the bill amount as revenue, even though the payment may be receivedlater.
Going Concern
As per this assumption, the business will exist for a long period and transactions are recordedfrom this point of view.
The cash basis of accounting is a method wherein revenue is recognised when it is actually received, rather than when it is earned. Expenses arebooked when they are actually paid, rather than when incurred. This method is usually not considered to be in conformity with accounting principles and is, therefore, used only in select situations such as for very small busi-nesses.